In his sixth State of the City speech Thursday night, Newark Mayor Cory Booker said that the city is starting to rebound after a crippling recession and has $1 billion in development on tap for the next two years.

“Newark is flexing its muscles,” Booker said during the 40-minute speech at the New Jersey Performing Arts Center.

Booker highlighted two hotels being constructed in the city, along with college housing, entertainment and loft projects coming to downtown.

“We find ourselves now a stronger city,” he said. “We can take pride that Newark, N.J., in a time of urban despair, has become a city of emergent hope.”

He acknowledged that crime increased between 2010 and 2011, but said that the trend was starting to reverse. Gun recovery is up 108% this year, Booker said, and the city will expand a nationally recognized violence deterrence program to other neighborhoods this year.

He also gave his support to a tenure reform bill that is now being considered by the state Legislature. The bill is set to have a hearing in Trenton on Monday.

And he rallied Municipal Council members to get behind his city budget, including cutting their own salaries. To sweeten the pot, he pledged that there would no “significant layoffs” or furloughs in 2012 for the first time in three years.

“Here in Newark we have seen tough times before, so the last six years we as a city have rolled up our sleeves,” he said.

The speech drew applause, but wasn’t without critics: two members of the Municipal Council walked out mid-way after Booker spoke about the need for them to tighten their belts and approve his plan to create a Newark water authority. The issue has caused tension between the mayor and the council, which voted down the proposal in 2010.

Newark does not have term limits for mayor, and most past heads of the city have run for several terms. Former mayor Sharpe James served five four-year terms until he stepped down in 2006.

Newark is starting to bounce back from the recession, though the recovery is slow. The city had an unemployment rate of 13.9% in December 2011. After rising steadily in the early 2000s, building permits plummeted from 2,059 in 2006 to 224 in 2010, according to U.S. Census figures.

The city has had to be more creative about securing financing for big projects, including tapping lucrative state subsidies. And beginning last year, long stalled projects began to move forward, Booker said.

Ted Zengari, a Newark-based lawyer working on several projects in the pipeline for the city, also agreed that the city’s stalled development is turning a corner.

“Within a matter of months I think there will be more cranes up in the air,” he said.

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Booker sat down with The Wall Street Journal in advance of his State of the City speech on Thursday. Here are some excerpts from the discussion:

Where is Newark today compared to when you first took office?

Booker: We are seeing development that we haven’t seen in generations. It’s the first time in 40 years we are building downtown hotels. It the first time in 20 years you are seeing office towers begin to move back into our city … for years the headlines was always that companies were leaving Newark. Now you have national and international companies and corporation moving to Newark.

What kind of housing development is happening in Newark?

There is this creation of new neighborhoods within downtown … We have well over 100 units of new housing being snatched up quicker than I imagined. You have two major loft projects that have been swept up quickly.

Who is moving to Newark?

There’s something attractive to being part of a city that is starting to charge back and has that kind of excitement. You are seeing the artist community has started to increase. You are seeing gay and lesbian families start to increase … you are seeing students starting to stay after graduating …. We’ve had a boom in college expansions.

I can beat my friends to Manhattan through public transportation to downtown than those from the Upper East Side. It’s that close and convenient.

How did Newark deal with the recession?

It’s had to operate under tough fiscal times. What we have done isn’t just cry and complain and blame. We’ve had to make the toughest decisions since the Gibson administration in the ‘70s. Find me another government that cut about 25% of its employees …. and still during that time, we’ve increased tax collections. We’ve increased efficiencies in our departments …. and we’ve begin to massively expand the way that government is serving families that risk.

Do you feel like you are winning this effort against crime?

We’re making a lot of progress … there was only one other city that had a bigger drop in shootings and murders [in 2009] than we did … [In May 2010] we had one year where everything was going against us …. I blame the moral shock of laying off about 150 police officers …. there was a significant problem with guns … We’ve turned the table dramatically on gun recoveries …. People had these automatic weapons that were just spraying street corners …. It was 12 months of hell …. I really feel like we regrouped.

How long do you plan on being in Newark?

For the rest of my life. I wasn’t born here but I plan on dying here. Maybe not as quickly as some people want me to, those are political folks [laughs].

This is my city. This is where I came of age …. I’m a Newarker. In the same way people love being part of New York City, I will be part of the Newark story for the rest of my life.